Category Archives: Inequality

Yesterday, the Sunday Times published its annual Rich List of the 1,000 wealthiest people in the UK. Their wealth has been booming, more than doubling in the last 10 years and increasing from £519billion to £547billion in the last year alone. In one year, that’s a £28billion increase, or £3million more every single hour that sits in the land, property, assets or shares of the very richest (data does not include bank accounts).

Oxfam recognises that you can’t look at the wealth of the very richest in isolation. The money and power at the top impacts the rest of us, too.

Let’s look at property – the sector where 161 of the 1,000 richest people are listed as having interests. The collective wealth of these 161 people is £117billion. These individuals and families recorded an increase from the previous year of $14bil and that’s not including the increase in the wealth of the 7 individuals that are new to the list. Ninety-six people on the Rich List are listed as having made their money exclusively from property and, for the other 65, property forms at least part of their money making projects. Owning property in the UK can be very profitable, as house prices continue to rise (7.2% in the last year and almost 10% in London). Some of these properties, very much seen as assets rather than homes, are simply left empty. This is a time when demand continues to outstrip supply for houses in the UK and when Mark Carney, the head of the Bank of England, believes that the housing crisis is “the biggest risk” to the UK economy. The housing and homeless charity Shelter released a report last month highlighting the stark inequality of access to the housing ladder in the UK between those than can afford to buy homes (the flyers) and those that increasingly struggle (the triers). Owning a house in the UK is becoming increasingly elusive for poorer people whilst the property millionaires watch their fortunes grow.

Not only do the richest continue to make more money, they have huge influence when they spend it. Last week the Sunday Times published a list of the biggest political donors (it is no surprise that almost half the individuals on last week’s list also feature on the Rich List). It found that 25 individuals were responsible for one quarter of all party donations. Starting with the wealthiest, Galen and George Western, the 3rd wealthiest in the UK on this year’s Rich List, with $11billion, donated £100,000 to the Conservative Party. David and Simon Reuben, with a wealth of just under $10billion, donated more than £300,000 to the Conservative party. Lakshmi Mittal and family with a wealth of over £9billion donated £1million to the Labour party.

In January, we published a report which highlighted the extent of wealth inequality (that 80 people stat). This same report also looked at how much companies in different sectors spend on lobbying, to deliberately influence policies. The data analysed in the report shows us how wealthy individuals are financing our political system, bringing them access and influence that the rest of us could never dream of.

Runaway wealth is not just a story about people at the top, it affects all of us through our economy and political system and that’s why Oxfam is working to Even It Up and end extreme and rising inequality around the world.

Mishel and Kimball build upon previous work by Colin Gordon who concludes,

“Labor unions both sustained prosperity, and ensured that it was shared. The impact of all of this on wage or income inequality is a complex question (shaped by skill, occupation, education, and demographics) but the bottom line is clear: There is a demonstrable wage premium for union workers.”

Of South Africa’s 54 million population, the majority are black (80 per cent), compared to 9 percent white. Yet at Gate C54 where a flight from London to Johannesburg was boarding, almost every person in the queue seemed to be white. Of course I knew that South Africa’s economic inequality followed racial lines. But as I got on the plane (for a trip to work with colleagues and to visit some community projects), I have to admit feeling shocked that this aspect of inequality was so visibly manifest in a little microcosm of privilege and wealth.

Another dimension of this inequality is seen in the extent of food insecurity – one in four people in South Africa are hungry on a regular basis. One might think that such statistics concur with how we ‘Heathrow-istas’ too easily stereotype ‘Africa’ – as a monolithic country in a constant state of drought, famine and war. Yet, that is far from the reality – South Africa is, in fact, ‘food-secure’; i.e. it produces enough calories to feed every citizen.

I bought Atkinson’s book as soon as it hit the bookstore a couple of weeks ago, but haven’t finished it yet. I did read, however, his article “After Piketty” in the British Journal of Sociology some time ago, which is a good curtain raiser for the whole book – about which I’ll write more when I finish my reading.

Atkinson and Thomas Piketty (along with others) have worked together for several years, including in the gathering of the World Top Incomes Database, which has allowed us to understand the dynamics of concentration of income in several countries. In fact, in the first pages of his book, Piketty argues that his work wouldn’t have been possible without the “enthusiastic support” of Anthony Atkinson and Emmanuel Saez. So it’s natural that some of Atkinson’s analysis is closely connected to Piketty’s Capital in the 21st Century.

I recently saw the word ‘plutonomy’ in the title of an international relations academic article. It’s an intriguing and unfamiliar word, and its definition is causing me to ask some probing questions about our global economic order.

For those uninitiated like me, plutonomy describes an economy where the share of consumption and economic activity by the rich dwarfs everyone else. It’s a system where a small minority control most of the wealth and income, and consume nearly all the goods and services. Some might argue that the U.S., the UK and Canada approximate plutonomies.

Some critics of our work have asked why we looked at wealth, especially given the difficulties of measuring how it is distributed globally. Also, some charge that by only looking at wealth inequality, we’re missing the great reduction of extreme poverty that has taken place over the past couple decades as wages among the world’s poorest have risen, particularly in China and India.

So why not just look at income or consumption, since those don’t face the same problems of measuring wealth?

The answer is simple.

We are focusing on wealth because it is arguably the most significant source of power in the world.

Our analysis on wealth inequality projects that by next year, 2016, the top 1% of people will have more wealth that the rest of the world combined. It’s crazy that the wealthiest people are getting an increasing share of global wealth rather than it being used to support the lives and livelihoods of the poorest people. In a world where still a billion people live in extreme poverty, is this a future that we want or that our societies can sustain?

You might wonder how we came to this ominous projection for next year, so let’s take a look at the data. We now have wealth data from Credit Suisse for the years 2000-2014 for wealth shares of all deciles plus the top 5% and 1%.

It’s been an exciting week for Oxfam. Our newest piece of research Wealth: Having it all and wanting more conducted by Deborah Hardoon has received a lot of attention around the world, including coverage by the Economist, CNN, the BBC, etc. The report has sparked a global conversation about wealth and inequality, in the run up to the annual meeting of the World Economic Forum. While the most of the coverage has been positive, over the last few days, several people have also criticized in one way or another the results we presented. Fair enough. I want to focus on one issue in particular here: the use of wealth (assets minus debt) in our calculations.

The starting point: a flawed economic model?

It seems we are now entering a period of diminishing marginal benefit – if not increasing harm – from the sort of growth currently sought by most mainstream political parties and media. In most advanced industrial countries median wages have stagnated and while inter-national inequality is declining, intra-national inequality is increasing: ‘nations are growing closer, and classes are growing apart’.

Not only are too many people hurting from such levels of inequality; the sort of economic growth many countries have pursued for several decades now risks the sustainability of our planet. We have exceeded four of nine planetary boundaries: 83% of the world’s people are now living in countries using more resources than their countries can renew. No wonder Kenneth Boulding once warned: ‘Anyone who believes exponential growth can go on forever in a finite world is either a madman or an economist’.

(In the run up to the World Economic Forum in Davos , Deborah looks at the trends of billionaire’s wealth and compares it when the rest of world)

Wealth data from Credit Suisse, finds that the 99% have been getting less and less of the economic pie over the past few years as the 1% get more. By next year, if the 2010-2014 trend for the growing concentration of global wealth is to continue, the richest 1% of people in the world will have more wealth than the rest of the world put together.

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About Mind The Gap

“Refusing to deal with numbers rarely serves the interests of the least well-off.”
-Thomas Piketty, Capital in the Twenty-First Century This blog - Mind the Gap - is maintained by Ricardo Fuentes-Nieva, Head of Research at Oxfam GB. The blog focuses on debates around social justice - primarily on inequality and climate change. The main tools for these debates are academic research, data analysis, and other sources of strong and compelling evidence. As well as commentary from the Oxfam Great Britain Research Team, the blog will include contributions from guest bloggers, including academics, practitioners, other key thinkers on social justice issues. This blog is a forum for discussion and is not intended as a comprehensive statement of Oxfam’s agreed policies.